Trade’s Report 4-15

Good Day Traders,

Thanks for all the great comments about the ATTS service and the “How to Make Money Trading Stocks” webinar that blast out every Friday at 10 a.m. Pacific. You can either join live of catch the replay on YouTube.

The Mid-Week Market Sanity Check is back this Wednesday evening. Our Topic: How to be Sure you’re on the Right Side of the Trend: Intro to a New Moving Average

The integration of the Hull Moving Average into the Active Trend Trading System adds additional valuable clues that will provide more timely entries, exits and holds.

General Market Observation: The buyers won the week last week and drug the Indexes higher towards strong resistance. It is a challenge to not argue with the market because the internals are pretty weak but the price is still pushing up. Because both the SPX and NDX are weighted averages a few stocks can keep them on their upward trajectory but eventually gravity will take over if the leaders start stalling. It will be interesting to observe what takes place when prices do reach the established resistance zones. Will we see a flame out or are there enough fumes to make it to a higher altitude?

SPX: The resistance zone on the S&P starts at 2104 and runs up to 2120. While Thursday and Friday’s candlesticks were bullish and other indicators are looking positive there is still some lingering negative divergence on weekly charts. The chart below highlights several areas to watch next week. First if price goes into the resistance zone identified by the green rectangle directly off of Friday’s price action then watch for reversal signals. If price first moves back down to around the 2087 level to the 8, 20 or 50 day moving average then watch for a potential bounce. Since the beginning of the year there has been only one series of 3 weeks up in a row. Last week was the second week up in a row so if the Index’s personality has not changed then this week could be a toss-up week regarding direction. I will place price alerts on then SPX or SPY at the bottom, top and middle of the green rectangle and then act if one of those alerts is triggered.

Preferred ETF’s to trade will be SPY and/or SPXL.

NDX: One can draw a similar resistance rectangle on the NASDAQ 100 chart with the resistance zone starting at 4428 and ending at 4483. There is also a support level at 4288ish level that defines a larger horizontal trading range that is in play if the Index continues to move sideways.

Preferred ETF’s for the NDX are either QQQ or TQQQ.

RUT: The Russell is the “most likely” index. What I mean is it is closer to resistance at this year’s high and is showing the type of hesitation candlesticks. A failure at or near the 1267 level may provide a set up for a downside trade that could bounce down the stairs of support formed about every ten points down to about 1230.

Preferred ETF’s are IWM or TNA.

On each of the Index ETF’s if I’m trading to the downside it will be with the non-leveraged ETFs.

If you have not had a chance to check out the research Mike Trager and I have done to start the EWA service you can find a short 10 minute preview at: http://youtu.be/MgC9GMAWh4w

Remember if you are a premium or Early Warning Alert member you can receive Text Alerts and Trade Notifications if you send us your mobile phone number. Sent us your number with NO HYPHENS please and we’ll get you on the Text Notification List.

The How to Make Money Trading Stock Show—Free Webinar every Friday at 10 a.m. PDT. This weekly live and recorded webinar helped traders find great stocks and ETF’s to trade with excellent timing and helped them stay out of the market during times of weakness.

The “How to Make Money Trading Stocks” Show is back this Friday, April 17th

For our all Active Trend Trading Members here’s how we utilize our trading capital

Trading Capital Setup and Position Sizing: Every year we start the year off trading a $100K margin account make the math really easy for yearly returns.

Each trader must define their own trading capital in order to properly size trade positions to their own risk tolerance level!

The $100K account is split between up to 4 stocks and a leveraged Index ETF. Actual number of shares will vary of course depending on price of the entity traded. We have found that limiting open positions to only 5 entities greatly reduces the trade management time requirements for members. This goes back to our goals of providing a system designed for members who work full time.

Regardless of market conditions no more than 50% of available margin is used at any time.

Each Trade is split 50-50 between Income Generating & Capital Growth Objectives unless specified in the Order Alert

Naked Puts or short term options strategies will be used occasionally for Income Generating Positions

None of the trade setups are a recommendation to trade only notification of planned trades from set ups using the Active Trend Trading System. Each trader is responsible for establishing their own appropriate risk level on every trade.

Managing Existing Trades: Currently Flat the Market.

Pre-Earnings Trade: Only SHW reports this week off the IBD 50 list—no pre-earnings trade. NFLX also may provide fireworks after earnings on 4/15.

Potential Set Ups for this week:With the underlying weakness that has not totally surfaced caution on any position is appropriate. Traders and institutions are still buying the drops and selling the pops. This has put us into a shorter term swing trading scenario where trades tend to last only a few days. While not preferred from a position building perspective, it is what’s being offered. The new addition to the system will help navigate these choppy waters.

Upside: TSO leads the upside list and has retreated to strong support. AOS is another entity sitting right at support that may be preparing to go higher. Other upside stocks include: MTSI, ACT, INCY, GPRO, YY, and QIHU & TSLA with proper pullbacks. If oil continues to strengthen then both USO and UCO could offer good trading vehicles.

Downside: Three stocks in this bucket including GMCR, BIDU and ARRS.

Toss Ups: FB, MBLY and CYBR qualify as stocks that could go either way.

Leveraged Index ETFs: Waiting to hit resistance or support to navigate new trades.

Coming on the Radar: The Chinese market seems to be overheating. Recent price action looks like exhaustion rather than break away gaps. FXI is a good trading vehicle for this market providing excellent liquidity and option potential. Price has not shown it’s ready to top yet.

Comments and opinions written below this line of text may be provocative and only obliquely related to trading. Some may find these “Off the Wall” comments challenging to their outlook on life. I will not post any comments made on subject matter below this line, so if you disagree blast away.

OFF THE WALL

Off the Wall:Perhaps it would pay each of us to pay greater attention to the cumulative effects of small disciplines or lack of discipline in our lives. A couple of weeks ago Facebook sent me a photo I posted 5 years ago. When I looked at the photo it showed me a picture of me that was in a lot better shape than I am today. Comparing the “me” of today with the “me” from 5 years ago shows the cumulative effect of negligence in my fitness program. About 20 pounds heavier or actually more than that after all don’t we always tell little white lies about how much we really weigh? The sneaky thing about cumulative effects is that on a day-to-day basis we really don’t notice, but given enough time and they just show up! This cumulative effect happens whether the habits are healthy or unhealthy.

The exercise of becoming a wise and disciplined trader is also subject to the cumulative effect of a trader’s action or lack thereof. We want to be great traders but are we willing to do the little things in a routine manner that help us over time arrive at being a wise and disciplined trader? Just like a physical fitness effort the best results are obtained when one does a little on a regular schedule and sticks with it. What kind of trader would you be if you committed to following a healthy routine five days a week for 90 days? Would you be closer to achieving your goals as a trader? I bet you would!

Share Your Success: Many of you have sent me notes regarding the success you are having with the Active Trend Trading System. Please send your stories to me at dww@activetrendtrading.com or leave a post on the website. Thanks!